Things don’t always turn out the way you expect. Last week, this proved right in more ways than one where the RBI monetary policy announcement was concerned.
Dr. Niranjan Hiranandani, President, NAREDCO, explained, "The Reserve Bank of India’s MPC was expected to hike rates in its latest monetary review. Instead, it sprang a surprise and maintained ‘status quo’. The banking sector, like it has done just before the past two reviews, hiked interest rates. The RBI didn’t. This has real estate wondering whether it is just a bit of bother – or are we looking at an incomplete picture, and can expect to see something new in the coming days. Home loan rates remain untouched – in theory, as per the RBI’S stance. A section of banks have a day before the RBI announcement, hiked interest rates. So, will we see them reversing the latest hike – or, will we see something akin to the RBI announcing a hike in rates? The jury’s out on this, we will wait and watch."
Jaxay Shah, President, CREDAI National, pointed out, “RBI'S decision to keep the repo rate unchanged is a relief to developers, home buyers and real estate stakeholders at large. However, the economy is too precariously poised for real estate to pull itself by its bootstraps. We hope in particular for decisive steps to end the credit freeze. CREDAI strongly believes that any reduction in RBI repo rate should be immediately reflected in the floating interest rates charged to home buyers. Supreme Court’s directive to RBI to assess whether benefits of reduction in interest rates are being passed on to the borrowers is expected to alert banks and financial institutions of the need to do so.” Surprise
Anshul Jain, Country Head & Managing Director, Cushman & Wakefield India, opined, “Unchanged repo rate after two successive hikes was a surprise. However, lower inflation expectations and an uptick in manufacturing and construction activity with an associated increase in FDI and robust GDP growth allowed some head room to the RBI to keep the rate unchanged.”
Anshuman Magazine, Chairman, India and South East Asia, CBRE, said, “The decision by the RBI to keep key rates stable was taken in the backdrop of inflation being largely in control. The move imparts flexibility to the RBI to move in either direction in the coming months. Any hike in repo rate would have impacted consumption sentiments and also the real estate sector.”
Ramesh Nair, CEO & Country Head, JLL, emphasised, “Keeping a status quo on policy rate is a welcome step for the real estate sector as it will give the much-needed impetus to the housing market which has been showing signs of revival in the last six months. For home buyers, the timing could not have been better as lending rates are not expected to increase from current levels. Besides providing a major fillip to buyer sentiment, RBI’S move should also translate into boosting demand. With the latest GDP numbers indicating better growth prospects for the Indian economy, we hope the central bank will have enough elbow room to make it conducive for home buyers.”
Joe Verghese, Managing Director, Colliers International India, termed it as a good decision. “Considering the mood of uneasiness in the banking and financial sector, the RBI has taken the right step by not going in for another hike in interest rates at this stage. This would have only further dampened the sentiments across the real estate industry, especially with the festive season round the corner”.
Shishir Baijal, Chairman & Managing Director, Knight Frank India, underlined, “The RBI had hiked the policy rates by 50 bps in the previous two policy reviews. While we are in a rising interest rate cycle now, the pause will provide a temporary relief to the home buyer sentiment and support the festive season demand.”